Here Are Some Shocking Tactics States Use to Collect Your Student Debt

By:

You probably knew that your wages could be garnished for defaulting on your student loans, but did you know that in two US states, your driver’s license could be revoked as well?

For instance, the Montana Department of Justice outlines that a DUI can net you a six-month suspension of your license for your first conviction and a one-year suspension for your “second or subsequent conviction within 5 years.”

Go further down the list of suspendable infractions, and you’ll see that those who default on a student loan face potentially steeper penalties. Defaulting on a student loan in Montana could net you an “indefinite suspension until [the] student loan association notifies [the Montana] Motor Vehicles Division of compliance.” For comparison, that’s the same penalty as being “medically unable to safely operate a motor vehicle.”

Iowa’s Department of Motor Vehicles has matching legislation, stating that Iowa “is required to suspend a person’s driver’s license upon receiving a certificate of noncompliance from the College Student Aid Commission in regard to the person’s default on an obligation owed to or collected by the commission.”

In plain English? Iowa will take your driver’s license away for defaulting on your student loans. (They will also revoke your license for “at least two, but not more than six years” if you are deemed a “habitual offender based on severe violations” which include “manslaughter resulting from the operation of a motor vehicle” and “serious injury by a motor vehicle due to operating while under the influence.” Fail to pay your student loans for years, and you won’t have a license until you resume some kind of repayment plan. Kill someone with your car, and you won’t have your license suspended for more than six years.)

Eliminating the sources of income that a graduate already has or preventing them from securing employment altogether -- have you ever been asked about ‘reliable forms of transportation’ on a job application? -- creates a downward spiral that can lead to further indebtedness and poverty.

Millennials with student loan debt must risk what amounts to a modern debtor’s prison for trying to acquire the education we’ve been told that we need to succeed.

The problem can be even more inescapable for those with private student loan debt. Being debt averse and having received a hefty scholarship, I only have one private, institutional loan remaining. But if something were to happen that prevented me from paying even once, I would immediately go into default. It’s like playing roulette in exchange for the magic of zero-interest. Drafted? Check, please. Unemployed? Check, please. Dead? Check, please, next of kin.

Unlike a federal loan, I cannot defer payment for any reason. Thankfully, I live in a state where there’s no risk of losing my driver’s license -- and my only way to balance working four different jobs -- if I were to go into default.

President Obama alluded to a plan last week to wrangle America’s student debt by offering two free years of community college nationwide, which will be elaborated in his upcoming State of the Union. Addressing an audience in Knoxville, Tenn., earlier this month, Obama said of his proposal: “Opening the doors of higher education shouldn’t be a Republican issue or a Democratic issue. This is an American issue.” Sen. Elizabeth Warren (D-Mass.) has also called student loan debt an “economic emergency” -- seeking to increase college affordability with bills ranging from offering nearly zero-interest loans (like those given to Wall Street banks) to refinancing student loan debt via a new tax on America’s top income earners.